From poverty to abundance

(not edited draft)

“The history of poverty is almost the history of mankind.” \citep{hazlitt96} One feature of poverty is the extreme shortage of food—that is, famine. There are records of famines from ancient Rome in 441 BCE in Western Europe due to the fall of the Western Roman Empire. There were recurring famines in England and the European continent. Mass starvation frequently happened from the early Middle Ages to the beginning of the Industrial Revolution.

As it is well-known, Thomas Malthus (1766-1834), the English economist, suggested that the linear increase of food production implies the exponential increase of the population, rather than having a lower population, but with a higher living standard. It was a pessimistic perspective. The general view was that Malthus was wrong. Cheap and ample energy (provided mostly as the result of propagation of steam engines) and cheap and plenty raw materials resulted in both agricultural and industrial productivity during the Industrial Revolution. Food production also grew exponentially, and the exponent of food growth was larger than that of the population growth.

The steam engine was one example of the conversion of one type of energy (thermal) into another (mechanical). James Watt’s (1736–1819) used a feedback principle
to control the speed by self-regulation. It is a big event in the history of technological development. Watt designed a centrifugal flyball governor for regulating the speed of the rotary steam engine and a constant a constant speed was
generated by automatic control. The steam engine revolutionized the textile industry and transportation. Robert Fulton (1765-1815), an American engineer, developed a steamboat in 1807, which traveled between New York and Albany on the Hudson River, and George Stephenson (1781-1848) designed steam-powered railways, which crossed between Stockton and Darlington in the northeast of England in 1825.

So machines and new (coal-based) energy sources became the driving forces of the technological changes that interconnected society’s new lifestyles and organizations. Factories were established since the new machines were way too large to house in a worker’s cottage. Factories needed people. There was a fear among small textile workshop owners that machine-based factories would replace people, who would lose their jobs. A community, the Luddites, organized actions to destroy factories. The short-term job losses were compensated for by new machines and investments, by lower prices and by new products. From an historical perspective the Luddites were wrong: “If the Luddite fallacy were true we would all be out of work because productivity has been increasing for two centuries.” \citep{tabarrok03} Soon there was a transition from a rural society to an urban community. This transition is related to the free market and capitalism, as we know that new classes, the bourgeois and proletariat, appeared.

Returning to technology and industrial development, as they are the tools of the transition to abundance, we cannot overestimate the significance of the Bessemer process for the manufacture of steel. The new method made it possible to produce much cheaper, more impured steel. Most importantly, this steel was then used for large construction. The “robber barons,” as the men who oversaw industry giants are sometimes called, like them or not, contributed very much to the birth of modern America by building the modern industries of steel and railroads and integrating such infrastructure with oil and electricity.
The previous two centuries were very contradictory. While there were recurring famines in the 19th 20th centuries, and we had at least two terrible world wars, the years between 1800 and 2000 showed the most prolific growth and economic development in humankind’s history. Much of this progress stems from the Enlightenment.
%We write this text in November 2020, so it is difficult to detach from the US’s actual epidemics and political uncertainties. Still, looking at things from an historical perspective,
The gross world product (GWP) has grown with a dramatic velocity. Data and mathematical models show that GWP evolved at rates faster than exponential—what we call super-exponential. In the exponential growth rate, the acceleration (the speed of the change of velocity) is constant, but when the acceleration is growing, then GWP would keep to infinity \citep{roodman20}. Compared to the lingering misery of the past, human society made a rapid transition from poverty to abundance. (More discussion about growth processes will follow in \ref{ssec:toomuch}).

We don’t necessarily suggest that models capable of describing the past can be adopted without modification to predict the future. However, it is not unreasonable to imagine that new technologies like artificial intelligence will play a similar innovative role to increase growth, as tools like fire, the wheel, the steam engine, and electricity did. It is too early to see the mechanism, but new economic models \citep{acem-rest19,petho18} suggest that the job-reducing effects of automation are overcompensated for by the creation of new jobs that are not dependent on automation. However, optimistic and pessimistic predictions can coexist. In the fall of 2019, the journal \emph{European Economic Review} published a special issue with the title “The Economics of Malthusianism: Can Malthusism return?” In an era of declining population growth, when the proportion of dependents might surge dramatically due to an increase in life expectancy, some kinds of Malthusian concerns might return \citep{naso20}.

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